Information provision before a contract is offered

This paper considers an agency model in which the agent can update the principal’s belief before the contract is offered. We identify that the agent who has a bad potential to perform the task has a small chance to receive information rent, but if he receives it, he receives a large amount. Thus, the agent may choose to provide more information that shifts the principal’s belief to the negative direction if the prior belief is optimistic.

MoreLess

Year of publication:	2014
Authors:	Kim, Jaesoo ; Shin, Dongsoo
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 124.2014, 3, p. 490-493
Publisher:	Elsevier
Subject:	Agency contracting \| Information provision \| Information rent

More details

Type of publication:	Article
Classification:	D82 - Asymmetric and Private Information ; D86 - Economics of Contract: Theory
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010930721